Crunch-time

23 September 2008 By Una Galani Follow @ugalani

A money markets squeeze has prompted the UAE central bank to create a $14bn facility to free up lending. Dubai, which borrows heavily to fund its ambitious projects, will be the primary beneficiary. As sentiment turns, the emirate s days of rapid expansion look set for a rethink.

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The Central Bank of the United Arab Emirates announced on Monday that had set up a Dh50bn ($13.6bn) emergency facility to free up lending in the country's banking system. It follows a similar move last week made by the US Federal Reserve.

The bank said it expects the fund will be sufficient to meet needs for supporting continued financing of economic growth, but had also reviewed resources for additional support. No further details on the structure or workings of the facility were given.

Last week, the UAE central bank said in a statement that 90% of foreign speculative money had flowed out of the country. Bankers have called on other Gulf central banks to make similar interventions.

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